Work Contract - VAT, CST, Service Tax - Professionals - Taxation - TIK Share
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Work Contract - VAT, CST, Service Tax

shashidhar reddy


hello sir,
This is Shashidhar, a painting contractor from Hyderabad, recently i got a work contract (labor and material) in Hubli, karnataka. i am having a TIN no in Telangana and would like to purchase material on C-form in Hyderabad and get delivered in Hubli.
1) Can i purchase material on C- form
2) If yes what are the taxes i need to pay other than 2% CST on material in Karnataka
3) Do i need to get local TIN NO
4) I have been informed by my client that i need to pay local 14.5% vat on material in Karnataka 
   State if i get the material from hyderabad against CST kindly suggest.
5) Kindly suggest proforma invoice  which needs to  be raised from my side to my client under this       two conditions
a) procuring material from hyderabad against cst
b) procuring material aganst local vat 
6) Is service tax applicable if yes what's the percentage?

Rahul Rai


VAT is a location based tax, ie tax is applicable in the state where you sell your goods. If you sell your goods in Hydrabad to a buyer in Karnataka, then CST of 2% will be applicable if you have CST registration and also buyer has the TIN to give you C-form.

The best option is sell all materials from Hydrabad, obtain C-form from buyer in Hubli.

Once the buyer become owner of goods, you can do your work here and charge labour charges only. Incase you are charging whole contract at a single basis, you need to obtain a vat registration in Karnataka as a work contractor.